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January 17, 2006

How to sell less wine!

Read in Decanter the other day that , The Ramona Valley has become the third wine growing region of Southern California to be granted AVA status. Read the full story here.

This got me thinking. There is a trend here which is not good for the consumer. It follows the continuation of a ‘branding’ exercise that began hundreds of years ago and seems to be taking the New World down the same route as the Old World. Many producers seem to believe that the best way to be recognised is to strap some outmoded geographical reference onto the side of their winery. It underscores that the wine world is, for many, really about property as much as wine.

The rush for the creations of appellations in California is really driven by the vineyard owners desire to make their property more valuable; it seems everyone aspires to have their own Romanee-Conti. A few years ago, much of California's non coastal geography was relegated to a "California" appellation, which many people in the business view (incorrectly) as down market. So, there has been a push on the part of the owners in many areas to get their "own' appellation to enhance the value of their properties.

It is a fools errand. What these guys do not realize is that by slicing these growing areas thinner than prosciutto, they are just creating confusion for the consumer. Of course, the consumer is not on the radar of most growers or wineries for that matter. They think that their business is about managing the distributor network.

While Decanter mentions 168 AVA’s, The Tax & Trade Bureau (TTB) lists about 3,000 additional approved US county appellations. I do not know how many more specific appellations have been approved or have been applied for, but I suspect that that it will eventually wind up being a multiple of that number. But the point is that all the slicing and dicing will lead to an incomprehensible muddle of confusion for most consumers.

Of course, the exercise is modelled after the outdated European “Appellation Controllee” system. Which any casual observer can clearly see does not work for almost any of the producers outside of places like Champagne and Burgundy.

The dream of the vineyard owners is to make their little piece of real estate equivalent to 57th and 5th in New York City. It aint gonna happen. Napa is the equivalent of 57th and 5th and someone else already owns it. Further, it has taken the Napa folk about seventy years to position their piece of paradise in the minds of the consumer. Perhaps there is an argument to slicing and dicing Napa, but I am not entirely convinced.

The opportunity to make a difference in the marketplace is through branding. Not gratuitous claims that are without substance, but, through creating great wines and delivering them with meaning. Only a few wineries actually get it and ironically the best operate without these ridiculous geographical and historical constraints.

So, instead on focusing on brand value and doing the things that will make a difference to the consumer, land owners prefer to take the regulatory route of having the TTB give their place meaning. Ultimately all of these appellations (with a few notable exceptions) will be marginalized and mean nothing to anybody.

We do think about the issue of Appellation for Stormhoek. We selected “Wine of the Western Cape” as our Appellation because while we could use more specific appellations on some of our wines, we feel that South Africa is already so far away from most consumers, that using Appellations like Wellington, would just confuse. Already, when we say Wellington, I cannot tell you how many people start thinking that we are from New Zealand.

I can recall some of the first wine books that I ever read that had entire sections on how to read a German or Burgundy wine label. Call me silly, but I think that if a producer creates a label that a consumer cannot read and understand in a few seconds, then the producer is not doing his job.

Simplicity, good messages, great product. Remove the pretence. Wouldn’t it make for a simpler world?

Posted by nick at January 17, 2006 1:33 PM

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Comments

i tend agree with you. however, some smaller producers (particularly in south africa,) struggle to compete with the commercial muscle of the larger co-ops. so they turn to niché marketing and one of the most obvious points of differentiation is their unique geographical location, particularly when it comes to reflecting special climatic conditions that set the quality of their grapes apart from the competition.

just look at the increasing number of organic wine farms to see what i mean. branding alone doesn't make nearly as much of an impression to the local consumer.

clearly the problem lies when exporting these wines overseas. identity at the local level is often hard-won, so changing that for a different market means overcoming a tenacious mindset.

Posted by: Lorenzo at January 18, 2006 8:01 AM

Absurd...

...Unless you don't believe terroir plays any role in the production of wine.

Posted by: tom at January 28, 2006 2:54 PM

Tom:

The idea is that as known, recognizable places become cut up into smaller and smaller (less known) pieces, the ultimate consequence of this will be that terroir and 'place' becomes less meaningful to the average consumer. For example, there are more appellations in France and Italy that are unknown, than there are famous ones. For example, ask any American to name more than one or two French appellations and they will have trouble naming one other than Champagne and maybe Bordeaux.

The opportunity is for producers to imbue their wine with meaning That meaning may be about where they are from, but a couple of the most successful wines in the world associate with other ideas that are not about where the grapes are grown.

As the number of appellations explode and more and more placed based labels hit the market, "place" will become less of a selling point, of course with notable exceptions. The notion of terroir as a point of difference will become marginalized.

We believe in the notion of terroir, but not necessarily as a means of differentiating wine on the shelf.

Posted by: jason at January 29, 2006 12:58 AM

Jason:

The average consumer doesn't care about appellations and they have no reason to. They care about price, consistency and label design. Do you think the average consumer has any idea what "South Eastern Asutralia" means.

The carving up of appellations is done for winemakers and wine drinkers who do care about wine. In California you have appellations such as Russian River Valley, Sonoma Coast and Carneros, to name just a few, that really have no meaning. They are too big to have any meaning that might be linked to the terroir. However, if you carve them up into smaller, more consistent appellations they start to have meaning. And since they will be appellations inside larger appellations, the winemaker can always use the larger appellation on the bottle if they dont' care about terroir and care merely about recognizability.

It comes back to how much wine you have to sell, and how you want to sell it. But the fact is, the smaller the appellation is, the more meaning it has.

Posted by: tom at January 29, 2006 6:32 AM

Tom:

Entirely agree with the spirit of what you say and I am really speaking in a marketing sense, not in about the ideology of what's in the bottle. The issue is with the execution in the marketplace and the fact that some places probably aren't worth being "appellationed" but inevitably will be.

My issue is when there are ultimately thousands and thousands of wines shouting where they are from, "from" will tend to lose meaning.

There are other implications as well, but maybe the discussion should fall under a new post.

Posted by: Jason at January 29, 2006 8:38 PM

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